Newton Labs leased chronometers from Brookline Instruments on January 1, 2018. Brookline Instruments manufactured the chronometers at a cost of $200,000. The chronometers have a fair value of $260,000. Appropriate adjusting entries are made quarterly.
Related Information:
Lease term .......................................... 5 years (20 quarterly periods)
Quarterly lease payments ...... $14,547 at Jan. 1, 2018, and at Mar. 31, June
............................................... 30, Sept. 30, and Dec. 31 thereafter
Economic life of asset ...................................................... 6 years
Estimated residual value of chronometers at end of lease term ..... $11,228
Interest rate charged by the lessor ............................................. 8%
Required:
1. Prepare appropriate entries for Newton Labs to record the arrangement at its commencement, January 1, 2018, and on March 31, 2018.
2. Prepare appropriate entries for Brookline Instruments to record the arrangement at its commencement, January 1, 2018, and on March 31, 2018?